Tag: last-mile delivery

OM in the News: Amazon Integrates Drones for Faster Delivery

Amazon’s plan for drones operating out of the same buildings as traditional delivery vans shows its ambition to have the technology become a regular part of its day-to-day fulfillment operations, writes Supply Chain Dive (Oct. 20, 2023). “The integration aims to help Amazon streamline the retail experience, create a safer and more sustainable delivery model, and deliver products more quickly,” the company said.

An Amazon drone takes flight. Prime Air drones will start deploying at same-day delivery sites rather than standalone facilities

Meanwhile, the plan for new drone delivery locations in the U.S. and abroad expand Amazon’s efforts to scale the emerging transportation method. Amazon has been using drones for nearly a year to deliver packages weighing up to five pounds in one hour or less. In College Station, Texas, Amazon drones have delivered hundreds of household items since 2022.

Amazon noted it eventually wants its drones to fly thousands of times and deliver millions of packages annually for customers. However, the rollout for its drone program has been slow, complicated by reported safety challenges and limited delivery activity in addition to industry-wide hurdles to mass adoption. “We are working closely with national regulators and international regulators, and communities in the EU, Italy, the UK, and the U.S., to develop this program,” Amazon said. “We have committed the necessary time and resources to build a safe and scalable service.”

Amazon has the opportunity to scale up its drone delivery coverage quickly by stationing them at same-day delivery sites. The company plans to double the number of these smaller facilities, which are stationed near metro areas and use a streamlined fulfillment process, in the coming years. “Think of products that fit the size and weight capabilities of the drone — like cold medicines and batteries — we place them close to customers at these sites, which enables us to deliver them at our fastest speeds, and now it makes sense to make deliveries even faster via drones,” Amazon said.

Amazon plans to lean on its MK30 drone to make the deliveries, replacing its existing drones by the end of 2024. The new design can fly twice as far as previous Prime Air drone models, expanding the company’s drone delivery range.

Classroom discussion questions:

  1. What are the advantages of drone deliveries?
  2. Limitations?

OM in the News: Superfast Delivery Shifts into Low Gear

In Chapter 2, we describe how companies can achieve competitive advantage (see pages 36-39) through differentiation, cost, or response (speed). For years, Amazon.com set the pace for competition on speed with its investment in next-day and same-day delivery.

Companies like UPS are turning away from more expensive fast delivery as a way of trimming costs.

But retailers this holiday season, reports The Wall Street Journal (Nov. 10, 2022), are focusing on delivering packages to customers on specific dates, rather than competing on speed of delivery. The shift marks an easing in a race for delivery speed in e-commerce in recent years that has pushed goods to shoppers’ homes at an ever-faster pace while narrowing retailers’ profit margins on sales.

With inflation-conscious consumers now dialing back their online shopping, many retailers are focused on restraining the high costs of fulfillment and “last-mile delivery”.

Amazon now gives its Prime members the option to pick a specific delivery date. Other retailers and logistics operators are now following suit. The idea is to offer “an anticipated delivery time” … whether that is 2 days or that is 3 days.

Saks shows shoppers what day they can expect any given item to arrive based on factors such as their ZIP Code. The feature refines the retailer’s previous 3- to 5-day shipping window. The choice makes clear to consumers that faster delivery carries a higher cost.

Chinese giant online apparel retailer Shein, known for its low-price and trendy clothing, says that rapid sales growth and superfast delivery don’t have to go hand-in-hand, even in fast fashion. Online shoppers are now more willing to wait for certain deliveries, having gotten used to pandemic supply-chain disruptions. Shein focuses on the front end of its supply chain, which includes manufacturing and shipping out of Guangzhou, China. It has significant business in the U.S. even though its website says it takes 10 to 15 days for American customers to get orders. .

Shein plans to expand its North American business by opening three distribution centers in the U.S., but even those will only speed up delivery by 3 or 4 days. The most important factor for consumers has become the visibility of it all and being able to know when to expect a delivery, as opposed to the assurance that it’ll be a superfast delivery. “Sometimes they want it really, really fast, or they want it really, really scheduled,” said a UPS exec.

Classroom discussion questions:

  1. How is speedy delivery an OM issue?
  2. Are your students willing to wait longer for an “anticipated” delivery time?

OM in the News: The Intelligent Tire and “Last Mile” Delivery

Alongside the tire jack and the air pump, consider the algorithm as a tool for fixing flats, writes The Wall Street Journal (June 17, 2021). Goodyear Tire & Rubber and Bridgestone are rolling out new intelligent tire features that use sensors and artificial intelligence for vehicles delivering packages from e-commerce sites.

The technology is geared toward vehicles that specialize in last-mile delivery, which refers to the final step in getting packages from a distribution center to the customer. The market for last-mile delivery has picked up as online shopping has soared during the coronavirus pandemic. The volume of parcels is expected to grow to 200 billion in 2025, up from an estimated 100 billion in 2019,

tire

Goodyear’s new technology is called SightLine and includes a sensor and proprietary machine-learning algorithms that can predict flat tires or other issues days ahead of time, by measuring tire wear, pressure, road-surface conditions and many other factors. Sightline’s sensor tracks dozens of measurements such as tire wear, inflation and road-surface conditions and a battery that detects temperature, pressure, acceleration and vibration.

The surge of last-mile deliveries means that a lot of vehicles are on the road, stopping and going, hitting curbs, causing damage to the tires, causing breakdowns and congestion. Last-mile delivery vehicles can go through four sets of tires a year, which is highly inefficient from a cost and sustainability perspective.

Vehicles using Goodyear’s intelligent tires can shorten the stopping distance lost by wear and tear on a tire by about 30%. Helping detect tire-related problems before they happen can lead to fewer breakdowns, less traffic congestion and increased safety for last-mile delivery drivers. Tire manufacturers are also investing more heavily in the field of telematics, which refers to the use of technology to collect and monitor data relating to a vehicle or parts of a vehicle.

Classroom discussion questions:

  1. How can this tire impact the logistics of a firm?
  2. Why is the “last mile” so important in the supply chain?